Gramercy Capital to Acquire Fellow REIT American Financial for 31% Premium

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Includes: AFR, GPT, MS
by: Jonathan Liss

Real Estate Investment Trust [REIT] Gramercy Capital Corp. announced Monday morning it will acquire fellow REIT American Financial Realty for $1.1 billion in cash and stock. Gramercy will also take on $2.3 billion of American Financial's debt. The deal is expected to close during the first quarter of 2008. The offer for $5.50 in cash and 0.12096 Gramercy shares for every share of American Financial (for a total per-share offer of $8.43) values American financial at a 31% premium to its closing price of $6.45 Friday. Its shares are down nearly 44% YTD. Gramercy CEO Marc Holliday had this to say: "In a single stroke, it will make the company a leading player in commercial real estate ownership, and further differentiate us from our current peers. We believe that the American Financial portfolio contains unrealized potential that we are uniquely qualified to extract." Gramercy's shares are down nearly 22% YTD. In other news, Morgan Stanley's Real Estate unit bought $100 million of Gramercy stock at an average price of $26.25 a share last week.

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